Santosh Mehrotra and Dr. Harshil Sharma 
India’s skilling and apprenticeship budget has increased in the past few years, driven by the government’s strategic initiatives to address the skill gap. The labour and skill development ministry has received a significant boost in this year’s Budget, with an allocation of Rs 38,746.3 crore – an 80% increase from Rs 21,608 crore in the previous year. Union finance minister Nirmala Sitharaman outlined plans to spend Rs 2 lakh crore over the next five years, reinforcing the government’s commitment to skill development and internship programs.
Even after so many interventions and schemes like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) (2015 to present), Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY) (2014 to present), and the National Apprenticeship Promotion Scheme (NAPS) (2016 to present), placement data and efficiency of these schemes are not available for monitoring and evaluation. A deeper dive into the implementation of these policies raises concerns.
Despite the increased allocation of funds, the focus seems to be on expanding the quantity of trained individuals rather than improving the quality of training. The government is prioritising capital expenditure and quick certifications over substantive skill development, leading to an influx of individuals who may hold certificates but lack real-world proficiency.
Major increase in New ITI upgradation scheme but investment only in CAPEX
The government’s ambitious ITI upgradation scheme, announced in the Union Budget 2024-25, with a proposed investment of ₹60,000 crore over five years, aims to revamp 1,000 Industrial Training Institutes (ITIs) under a hub-and-spoke model where Union and state governments contribute equally.
The budget for the new ITI upgradation scheme has increased from Rs 1,000 crore to 3,000 crore in 2025-26. However, the scheme’s formulation and implementation appear haphazard. Despite significant capital expenditure, there is little emphasis on updating curricula, enhancing teacher training or improving the overall skill development system.
A mid-term evaluation of a similar initiative, the model ITI scheme, revealed that a substantial portion of funds was allocated to civil works (57.9%) and equipment purchases (31.3%), with minimal focus on curriculum development or instructor training. The resultant campuses were revamped, but the quality of the training did not improve.
This pattern suggests that the current upgradation efforts may also prioritise infrastructure enhancements over substantive educational reforms, potentially limiting the effectiveness of the initiative to address the evolving demands of industry.
Vocational training trends
The latest data on workers who have formal vocational training presents a concerning trend. While formal vocational training saw a modest rise to 4.1% of the total workforce in 2023-24, informal training avenues, particularly hereditary skills rose from 1.45% in 2017 to 11.6% of the entire workforce in 2023. On-the-job training rose from 2.04% in 2017 to 9.3% in the same year.
A critical factor that accounts for such large and sudden increases, in such a short time, is the widespread implementation of recognition of prior learning (RPL), which certifies workers’ existing skills through short-duration courses, often lasting just a few hours to a week. This sudden rise in formally and informally trained individuals raises questions about the credibility and effectiveness of such training programs – going well beyond the questions that employers themselves have been raising about the employability of trainees and engineering graduates.
Additionally, there has been a sharp decline in the duration of skill development courses. In 2017-18, 29% of vocational trainees undertook courses lasting over two years, but by 2023-24, this number had plummeted to just 14.29%. Meanwhile, short-term training courses (under six months) have increased from 22% to 44%. This shift suggests a systemic preference for quick-fix certifications rather than comprehensive training that equips individuals with industry-relevant skills.
These numbers, please note, must be read with the fact that Annual Survey of Education Reports (ASER), year after year, have reminded us that at least half of India’s school children in grade 5 cannot read grade 2 texts in their mother tongue, nor carry out simple grade-appropriate math operations. In other words, India has adopted a model of quarter skilling our half-educated children coming out of our school systems.
The PMKVY paradox
The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), the flagship scheme under the Skill India Mission, continues to receive substantial funding, with PMKVY 4.0 launched in 2024 backed by Rs 12,000 crore. However, its implementation has been plagued by persistent challenges. The program is over-reliant on short-term training courses offered by private, National Skill Development Corporation (NSDC)-funded training providers, many of which last as little as 24 hours to three days.
Placement statistics under PMKVY tell their own story. While official reports claim a 54% placement rate, independent data analysis suggests that only 22.16% of trained individuals secured jobs. This downward trend is evident in successive iterations of the scheme – PMKVY 1.0 (2015) had a placement rate of 18.4%, which rose slightly to 23.4% under PMKVY 2.0 but plummeted to 10.1% under PMKVY 3.0. These figures suggest a disconnect between skill training initiatives and actual industry requirements. These figures were earlier available till July 2024 on PMKVY website but are no longer available on the dashboard.
The real cost of short-term training
The government has attempted to address skill gaps through amendments to the Apprenticeship Act of 1961, leading to a gradual rise in apprenticeship numbers with year-on-year growth of 30%. However, the impact remains minimal, with only about 780,000 apprentices in India’s 570-million-strong workforce as of 2024-25. While this represents a great increase from 250,000 apprentices a decade ago, it remains an insignificant proportion relative to India’s labour force.
In Budget 2024-25, there was an announcement that the government was financing 500 top companies to take on 1 crore interns over the next five years. Like so many budget schemes of yesteryears that get announced, there is not even so much a mention of it in the current budget. Only a pilot project has been initiated to place 1.25 lakh interns, and its selection process is still ongoing, one year after the announcement.
A large influx of individuals into the workforce now hold certificates that label them as skilled, yet many lack the actual competence to perform tasks effectively. This underscores the urgent need for stringent quality assessments in skill development programs. It is possible to estimate from the government’s National Sample Survey data ( annual Periodic Labour Force Survey) the unemployment by level of education or vocational/technical training. The unemployment rate among formally trained individuals remains alarmingly high at 17%, compared to just 4% for informally trained workers. This suggests that the industry is either sceptical of the effectiveness of government-run skilling programs or finds informally trained workers easier to employ at low salaries and avoid paying skill premiums.
Ensuring impact
This brief analysis of Skill India, announced with much fanfare, must be read with the manufacturing story and the overall employment crisis. It is notable that like ‘Skill India’, ‘Make in India’, also announced in 2015, has only seen the share of manufacturing contribution to Gross Value Added in India dropping from a 25-year average of 17% till 2015, to 13% after that, only to rise now to about 15.7% in 2023-24.
In 2017-18, India had reached the highest unemployment rate in the history of labour surveys in India. The economy slowed over 9 quarters from 2017 to early 2020, and then Covid sent unemployment shooting up, as the economy contracted (by twice as much as the global economy in FY2021). Hence, 80 million workers went back to agriculture, reversing the exit from agriculture between 2004-2019. Thus, the LFPR rose, as did WPR, and UR fell, but only because women also joined agriculture, as unpaid family labour (40 million additional UFL). That is what the KLEMS researchers and the prime minister have called ‘8 crore new jobs in 4 years (2020-24)’. The Economic Survey admits real wages have not risen for 80% of workers in the last five years, but still claims jobs have grown – a rather contradictory conclusion.
The Union Budget 2025-26’s substantial increase in funding for skill development is a promising step, but ensuring real impact requires moving beyond the mere expansion of training programs. The focus must shift from quantity to quality, ensuring that India’s workforce is truly equipped for the evolving demands of the economy.
India’s skill development strategy must move beyond infrastructure upgrades to focus on curriculum modernisation, instructor training, adoption of dual vocational principles and industry-aligned pedagogy to enhance employability. Effective monitoring of placement data, workplace skill application and employer feedback is essential to assess program impact. Expanding apprenticeships through regulatory reforms and industry incentives can bridge the gap between training and real job opportunities.
Short-term certifications should be balanced with longer, competency-driven courses that equip workers with practical skills. Aligning skilling initiatives with high-growth sectors under PLI and employment-linked incentive schemes will ensure meaningful employment. While increased funding is a positive step, India risks producing more certified individuals without real competencies. A quality-focused approach is critical to making skill development a true economic and social mobility driver.
However, such actions will still not suffice if we continue to permit India’s educational system to produce semi-educated people who are not employable. Nor will the hopes of India’s youth, the majority of whom are now getting certified, be realised in absence of much faster job creation in the non-farm sectors, as opposed to agriculture.
India’s policymakers seem unaware that the country’s demographic dividend, now in its fifth decade, will expire by 2040. With barely 15 years left to harness this potential, India risks becoming an ageing society while also facing the challenges of mass unemployment and an unprepared workforce.
Santosh Mehrotra was Prof of Economics, JNU, and Dr Harshil Sharma, Director, Indus Action, holds a Ph.D. in Labour Economics from JNU.